Responding to COVID-19: How to change your sales compensation plan

covid compensation plans

During these unprecedented times, organizational sales leaders everywhere are asking, “How should I change my compensation plan if my company is impacted by COVID-19?” This pandemic has uniquely affected all companies and industries and for some, sales numbers have (and may continue to) slow down. For others, companies are faced with the hard decision of laying off or furloughing parts of their organization. No matter what, leaders are having to quickly adapt their sales strategies and a big part of that is sales compensation plans. It’s important to keep your employees happy during this time, and one surefire way to do that is to make sure they are getting paid.

There are a lot of different “levers” you can pull within a compensation plan to make it more rep-friendly during uncertain economic times. Below are the 5 that I have recommended to different organizations. Note: I don’t recommend using all 5 of these tactics simultaneously, it’s important to hold some additional tools in case of a prolonged downturn.

Lower quotas

I’m leading out with the big one here: lowering quotas. While this is generally frowned upon, unprecedented times call for moves that are bold. If your reps aren’t going to hit their quotas, holding them to it is nothing but demotivating. Some organizations are simply removing quotas for the time being instead of lowering them and having to go through the pain of raising them again in a few months. It’s important to act swiftly yet deliberately while considering longer-term implications. Finding the right balance can be a challenge. Need help figuring out what your new quota should be? Let’s chat, here’s my calendar:

Remove decelerated commission and commission cliffs

If you have a sales compensation plan that includes a “decelerator”, for example, if a rep earns less than 50% of their on-target earnings for hitting 50% of their quota, now might be the time to remove that component. Nothing is more demotivating than doing all you can to sell deals and earning less than you would normally on the same deals. The same goes for commission “cliffs,” when a rep doesn’t earn any commission until they hit a certain quota attainment percentage.

Add in additional incentives

Cash can be tight in an economic downturn, which means when people exceed their quota, it should be celebrated! If you don’t have an accelerator for overperformance, now might be the time to introduce one. Or if you do have an accelerator, maybe you want to double it for the next 3 months. Travel is currently impossible (and unsafe!) but when the world gets back to normal, your reps might want a vacation; now could be a good time to run a competition with a (post-pandemic) vacation as the prize. Also, most salespeople are working from home so you can use perks like standing desks, noise-canceling headphones, and nice monitors as a motivator.

Compensate on something other than revenue

While budgets are frozen, now might be the time to compensate your reps on something that benefits them long term. You could take a page out of the SDR playbook and reward your reps for setting meetings, building pipeline, or other top-of-funnel activities like calls/emails. While new spending might be frozen, existing contracts might be freed up, so you could employ your sales team to work on upsells and renewals on your current customer base. You can even get creative and have your sales team send emails surrounding a fundraiser or have them spend their time making masks for local hospitals.

Remove Performance Improvement Plans

If someone is fearing for their job, in addition to everything else that’s going on, they might become too stressed to do their job successfully. A way to prevent this is to temporarily suspend Performance Improvement Plans (PIPs) for anyone currently on one and declare that you won’t be issuing any until a specific date (subject to change). While you still want people doing their jobs, adding the risk of them losing their income during an already uncertain time will hurt morale for years to come. Instead, investigate additional health and wellness initiatives to make sure your reps feel physically and emotionally fit during these turbulent times. Try online yoga, guided meditation, additional 1-on-1s, virtual team happy hours, etc.

While each of these techniques might provide temporary support, remember that you need to be very careful about how you message changes to your sales team. If you haven’t seen a downturn in sales or new meetings, don’t lower quota proactively! It’s more likely to cause panic and be a self-fulfilling prophecy. Use QuotaPath to keep a very close eye on your team’s performance and earnings to ensure you’re aware of how changes might impact them — entirely for free.

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